Euro rally predicted as traders await Draghi comments

Jasper Juinen | Bloomberg | Getty Images

Mario Draghi, president of the European Central Bank (ECB), reacts ahead of a Eurogroup meeting of European finance ministers in Brussels, Belgium, on Monday, May 22, 2017.

The euro could rally Thursday afternoon in the aftermath of a monetary policy meeting from the European Central Bank (ECB), despite earlier reports suggesting a dovish stance from President Mario Draghi.

“Draghi will try to roll out the dovish artillery to avoid the impression that there is any shift in the ECB’s stance, but a shift is taking place nonetheless as the ECB will need to eliminate the more dovish guidance from its latest statements, like the possibility of more easing,” John Hardy, head of forex strategy at Saxo Bank, told CNBC via email on Thursday morning.

“I think the dovish inflation forecasts that were leaked were a way to avoid the euro rallying – which I think it will eventually in the wake of today’s (Thursday’s) meeting, even if there is a brief dip because very little new is actually announced,” he added.

On Wednesday, media reports from Bloomberg indicated that the ECB is set to cut inflation outlooks through 2019 and raise gross domestic product projections for the same year. The euro dipped on the reports.

Though analysts do not foresee a change in policy at Thursday’s meeting, they mostly point to an easing in tone from Draghi. Economic indicators have shown a more resilient euro area and inflation has neared the central bank’s close but below 2 percent target. Core inflation figures remain subdued.